Despite Mayor Antonio Villaraigosa's “guarantee” that the city of Los Angeles will not go bankrupt, there's a fair amount of evidence demonstrating it's quite possible, at least according to urban-history author and economic journalist Joel Kotkin (via LABizObserved).
Although City Hall's plan to lay off as many as 4,000 employees is a mess that will have a hard time moving forward, Kotkin doesn't blame L.A.'s current payroll for its clouded economic future (which includes a $212 million-and-counting deficit). Rather he says the city's economic time bomb is comprised of fat-cat pensions negotiated by powerful unions.
It's the same problem, he says, that felled General Motors and that has helped to weigh the state of California down with a $20 billion deficit. When workers retire, the city continues to pay them. Sometimes a lot.
“Caifornia and Los Angeles are joined at the hip with many of the same kinds of problems and they're both sinking into the swamp deeper and deeper,” Kotkin states.